February 19, 2018 / 1:46 PM / in 10 months

Croatia's Krk LNG project faces opposition as investment decision looms

ZAGREB, Feb 19 (Reuters) - Croatia’s plans for a floating liquefied natural gas (LNG) terminal on the Adriatic island of Krk require a final investment decision by June if it is to hit a 2020 start target, the managing director of project manager LNG Hrvatska said on Monday.

The project, part of European Union efforts to diversify away from Russian energy imports, is opposed by some environmentalists and residents.

“The end of June is a definite deadline for the final investment decision if the terminal is to be completed by the end of 2019 and start operating in early 2020,” LNG Hrvatska boss Goran Francic told Reuters.

The EU has said it would invest 101.4 million euros or 28 percent of the project’s assessed value and the United States has also expressed strong support for the terminal which could be used to import U.S. gas.

The terminal’s initial annual capacity is planned at 2.6 billion cubic metres (bcm) which is roughly Croatia’s annual consumption.

Croatia produces around a half of its gas consumption and the terminal would also supply central and eastern European countries.

“By the end of May we should have agreements on using the terminal’s capacity. The number of non-binding offers from last year, mostly from foreign firms, bodes well for the ongoing binding tender,” Francic said.

He said land and construction permits are expected in April and June, respectively, pending confirmation by the energy minister that the project poses no threat for the environment.

ENVIRONMENTAL CONCERNS

An expert commission is likely to give its opinion on the terminal’s environmental impact next month. Francic said an environmental study, provided by LNG Hrvatska, had properly addressed all concerns about protection of the environment.

However, environmentalists and local communities on Krk island have raised concerns about the impact on sea life and tourism and suggest the terminal be built on land instead, which is more expensive.

“The problem for us is the use of sea water in the process of converting liquefied gas which will cool the water and is damaging in a small bay, as well as the plan to use chlorine for protection of the pipes from algae and shells,” said Vjeran Pirsic from Krk-based environmentalist group Eko Kvarner.

The government has recently announced a special law to speed up the construction of the terminal which Pirsic also finds inappropriate.

“It’s a restriction of democracy if the government goes against the will of the local communities by imposing a special law,” said Pirsic, adding that the project does not have to be scrapped but rather substantially improved.

Environmentalists and Krk local municipalities have announced a protest against the terminal for March 3 in the nearby port of Rijeka.

Pirsic said all legal means and methods of civil disobedience will be used to stop the terminal as it is currently planned.

Marija Mileta from ecology group Zelena Akcija said Croatia should scrap the LNG terminal altogether and focus on renewables as non-carbon emitting energy sources.

Reporting by Igor Ilic; editing by Jason Neely

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